What Is Business Process Reengineering?
Business process reengineering is a structured approach to improving a company’s performance in areas such as cost, service, quality, and speed through changes in (appropriately) processes. This radical change methodology starts at the highest level of a company and works down to the most minute details to overhaul the system in a short time. As a complete redesign, BPR differs from other methodologies where incremental improvements result from from regular process updates. Companies undergoing BPR must reassess their fundamentals and reform their processes with the goal of standardization and simplification.
Ambitious companies that implement BPR start with the intent of doing whatever it takes to improve performance across the business. Examples of company-specific goals through BPR include:
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Taking a decentralized process and making one person responsible for it
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Redeveloping the company’s goals so improvement plans are consistent
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Taking a department-specific process and assigning it to coordinate and integrate cross-functionally
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Going from a product perspective to a process perspective
The term “reengineering” suggests that an item has already been developed and is now being redeveloped. In this case, the business’s processes are undergoing redevelopment. Business processes are the sets of activities that lead to specific goals or outcomes. Usually they are performed regularly and systematically. In most businesses, changes to a pre-existing process happen relatively slowly and incrementally. With BPR, however, the most modern tools are put to use from the ground up as the business rethinks the fundamentals of existing processes, ideas, and designs.
The term “process” focuses on how work is done, not on the specific people, their job descriptions, or the tasks they perform. BPR is more interested in the series of steps that produce the product or service, from conception through creation.
BPR can bring dramatic business improvements in quality and productivity. However, because extensive employee input and engagement are required, BPR can be very expensive and time-intensive to implement. An alternative to the traditional approach of constant meetings is group decision support software (GDSS), which helps solve unstructured or semi-structured issues by providing collaboration platforms for idea generation and organization, conflict resolution, priority setting, and solution generation.
Another term for a GDSS is a computerized collaborative work system. BPR is also known as business process redesign, business transformation, or business process change management.
Business Process Reengineering Methodology Overview
Michael Hammer, an original promoter of BPR in the 1990s, preached “reengineering work: don’t automate, obliterate.” At the time, investments in technology were expected to return dramatic results to improve process performance. However, new technologies are often applied after a process had been in place for many years, so they are incapable of doing more than moderately speeding performance. Hammer recommended challenging the ingrained assumptions and rules, so real improvements could be made.
Early on, the field of BPR discovered numerous recommendations:
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Organize around the outcome, not the specific task. One person owns a whole process, performing or coordinating all steps.
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Those closest to the process should perform the process. Instead of farming out different types of easily managed work, the people who need the quick outcomes from simple tasks take ownership.
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Have the people who produce the information process it. This streamlines the outcome of the information gathered into usable data.
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Centralize resources. Databases and other technology systems can consolidate resources to cut down on redundancies and increase flexibility.
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Integrate corresponding activities, not merely their results. This keeps the content cohesive, without the gaps and miscommunication that could cause delays.
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Control the decision points and where the work is done. Built-in controls enable the employees who perform the work to self-manage, so managers can become supportive rather than directive.
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Information should be collected once and at the source. You can erase data redundancies when processes are connected in a central database.
BPR Frameworks: INSPIRE, PRLC, and More
Due to the unique nature of every company and its distinctive challenges, there is no universal framework for BPR. Instead, BPR should adapt to not only the company, but also the customers and stakeholders. Consultants in business process management have tried to make easy guidelines. They often use proprietary frameworks based upon the experience and philosophy, then tailor the methodology to the specific company they are working with. For example, Bhudeb Chakravarti developed the INSPIRE (Initiate, Negotiate, Select, Plan, Investigate, Redesign, and Ensure) framework, and M’hammed Abdous and Wu He developed a framework specifically for higher education with four steps: initiation, analysis, reengineering, and implementation and evaluation. William J. Kettinger, Subashish Guha, and James T. C. Teng developed the Process Reengineering Life Cycle (PRLC) Methodology, which will be detailed below.
All of the suggested frameworks take into account basic guiding principles for BPR. These can make the process more advantageous and increase the chances for successful outcomes. They often differ in their emphasis in designing new processes versus redesigning old processes and the sequence of steps. Michael Glykas and George Valiris strongly recommend a multidisciplinary approach that encompasses both process improvement and innovation. Regardless of how an organization undertakes BPR, they must have a deep understanding of their business culture and a clear vision, and they must use the most suitable, relevant information technology. They should ask several core questions before adopting BPR:
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Who are the customers?
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What value do we offer the customer?
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Do the current processes deliver the expected value?
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Do the processes need to be redesigned or completely redefined?
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Do the current processes sync with the company’s long-term goals?
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If we started over from scratch, would we still use the existing processes?
Common guiding principles for the stages of BPR are as follows:
BPR Step 0: Preparation and Coordination
Although all the steps in a BPR plan are important to a successful product, you will have the best chance for success when you properly lay the foundation. The company vision and mission statements should already be developed, and you should have an idea of where the current processes fall short of meeting customer needs.
BPR Step 1: Set the Vision
Companies must be clear on why they want or need to reengineer their processes and why they aren’t where they have to be. A business-needs analysis could help start the process and convince stakeholders with clearly defined and measurable objectives. The organization must understand that their current processes require changes and invest in a vision for the future. Understanding the reasons are critical because they ensure employee buy-in. Otherwise, the employees may feel that their work life is threatened. They may obstruct the change, especially the necessary radical alterations that come with BPR. Since absolute support is critical, a clear vision of the intended consequences can give the employees a goal to rally.
Another option is to design an organizational learning agenda, which is a set of questions that your project team develops ahead of the project plan. They help identify what your company needs to learn before the start of the decision-making phase, especially when you have a very large agency or a project that cuts across many departments.
BPR Step 2: Assemble the Team
Next, the company gathers a team that can consist of internal employees, consultants, or a mix of both to conduct the reengineering. Depending on the project scope, the business should consider these factors choosing a team:
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Should an initial team consider the reengineering?
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Should the team be responsible for the BPR in its entirety?
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What experience and background should team members have with respect to the company or the field?
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Should the team be a smaller core group or a larger contributor group?
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How much autonomy does the team have with decisions?
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Should the team include members outside of the company?
Hammer and Champy discuss five specific roles that should comprise the BPR team: the leader, the process owner, the reengineering team, the steering committee, and the reengineering czar. They cite that the core reengineering team ideally includes five to 10 people. A truly effective BPR team has representatives from each group:
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Top management
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The area that the process addresses
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Information technology
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Finance
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End process users group
Your BPR team should be diverse and include members that could add value with their contextual knowledge. These members may not be obvious choices, but consider them for their objectivity and expertise:
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Staff who do not know the process at all
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Staff who are experts in the process
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Customers
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Staff from the affected department
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Technology experts
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External professionals
An effective BPR team is competent, motivated, credible within the company, empowered, well-led, organized, and complementary in its composition, and it has specific goals.
BPR Step 3: Determine the Processes
This portion of BPR requires a comprehensive study of the company itself, looking at its mission, goals, the needs of its customers, and how the company is meeting those demands. Through this lens, the team reviews and analyzes current performance of the processes, rooting out weaknesses and non-value-add tasks, while asking what each process is trying to accomplish. It is imperative at this step to choose which process(es) to initially evaluate, starting with a small amount so as not to overwhelm the company. Hammer and Champy discourage benchmarking — measuring your company’s performance against similar but best-in-class companies — because it can restrict innovative thinking.
BPR Step 4: Redesign
This is the portion of BPR where the team gets to flex its creative muscle and craft the main principles that will be applied to the reengineering effort. These include figuring out what biases and assumptions that the team works under and looking for opportunities to integrate technology. Team members should remember that they are not only making the old processes better, but completely redesigning how they are performed. Also, no specific rules govern the redesign.
Consider using a process analysis checklist to identify efficiencies and inefficiencies in existing process maps. This helps get the process reviewers to think about the questions they need to ask of each process. For a BPR project, the process analysis checklist would look for ways to:
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Reduce the number of handoffs
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Centralize the data
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Decrease the number of delays
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Release resources quicker
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Combine related activities
Download Process Analysis Checklist
BPR Step 5: Include the Whole Company
Companies should remember that BPR does not work well if it is done in a bubble. Not only should companies get employee feedback, they should also review the other portions of the company that will evolve because of the changes. The company is managing change, thus ensuring maximum benefits and minimal negative impact. This may include organizational and management structures, as well as logistics, operations, customer case managers, production, manufacturing, corporate, and different management levels. Experts in reengineering techniques can help design ways to communicate with a variety of project stakeholders. Further, continued communication about the reengineering process itself, the results, and the employees’ part in it is essential and empowers the workers. Reinforcing the reengineering method through performance incentives keeps them positive and engaged.
Process Reengineering Life Cycle (PRLC) Methodology
Source: Kai Simon
One of the more recent methodologies proposed for BPR is the Process Reengineering Life Cycle (PRLC). The six sequential stages include:
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Envision new processes
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Initiate change
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Process diagnosis
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Process redesign
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Reconstruction
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Process monitoring
The PRLC advocates for looping back to the beginning to diagnose processes that are again in need of change.
This means that your business will:
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Examine all tasks that work to achieve the same goal and combine them.
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Prioritize the work in the place that makes the most sense. Parallel processes that give the same outcome will be connected in the process, not at the end.
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Get rid of unnecessary control systems and make resources within the process provide the necessary data.
Objectives of Business Process Reengineering
When designing a BPR methodology, the business must consider its focus. When first introduced, BPR centered on customer care, speed, compression, flexibility, quality, innovation, and productivity. But to appeal to heavily regulated and multinational industries, Jochen Martin overhauled the BPR objectives in 2011. They now include contact reduction, task elimination, task automation, process integration, waiting time reduction, data quality, and data completeness. These objectives focus more on governance and compliance, and they’ve helped rebrand BPR for business process management, making it relevant again.
According to Jeff Tindall, CSSLP, and Managing Director at Tindall Media, “‘We've always done it that way’ is one of the most dangerous phrases for any business. If you are not continually challenging yourself, then you are at risk to have the market pass you by. People and industries are becoming more receptive to market disruptors, and it is a real risk to new and established businesses.
“Business process redesign (BPR) is an essential part for any healthy business. I find it most helpful to assemble a team that includes some new people with different perspectives who can see things from a new angle and provide fresh ideas. It is also important to include subject matter experts who stay abreast of market changes and technological advances."
"’Change for the sake of change’ can be just as dangerous as ‘we've always done it that way.’ Before starting a BPR, be sure to define your objectives. A SWOT analysis can be helpful to identify your weaknesses and opportunities. This is usually a good place to focus your initial efforts. As you develop your new processes, think about how you will measure their success and where you can capture those data points throughout the process."
“Don't be afraid to experiment. There are many options that allow for rapid prototyping of new solutions. A prototype or pilot project is a great way to test a hypothesis without making a large investment. Some of the best ideas can feel scary and risky. Use prototypes and pilots as checkpoint to mitigate your risks.”
Expected Results and Benefits of Business Process Reengineering
A lot of companies downsized their workforces during the first wave of BPR, primarily due to the introduction of information technology. Processes that had been dependent on many personnel were reengineered to need fewer or even no people to perform them. Today, a BPR project assumes that technology is inherent in the company, but it may need updates or improvements. The benefits and expected results or implementing BPR are now:
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Increased effectiveness; identifying the core functions as well as any that are inefficient or obsolete
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Reduced overall cost and cycle time
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Meaningful work for staff; the process promotes greater staff involvement
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Improved organizational approach; realize business rules from the past, decreasing new product and process activity time
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Solidified business focus
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Business growth; improving the industry position with radical improvements
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Increased customer base
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Downsized company structure, empowering employees
What Problems Can BPR Solve for Your Company?
To help your company thrive in a more dynamic and changing environment, you must consider its structure and how it behaves. Most organizations aim to constantly improve performance while decreasing the cost of their services and products. To add value for your customers, you must first understand their needs. BPR can help your business continually evolve and solve these problems:
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Elevated operational costs
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Customer complaints of decreased quality
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Bottlenecks
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Middle management performing poorly
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Poor distribution of resources or tasks
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Failure to keep up with the competition
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ROI is still shrinking, despite capital investments on current processes
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Incremental improvements increase the complexity and costliness of the process
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Significantly broken processes that need more than simple corrections
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Fragmented responsibility for processes that result in a lack of accountability and problem solving
History of Business Process Reengineering
Michael Hammer first introduced BPR in a 1990 issue of the Harvard Business Review. A graduate of and professor at the Massachusetts Institute of Technology (MIT), Hammer wanted companies to redesign their operations, and not simply by using computers to speed up inefficient processes. His approach reflected the flatter, more customer-centric Information Age requirements and changed everything in the company — not just the processes, but also the people, managers, jobs, and values.
Since then, the modern company environment has become hypercompetitive and globalized, with demanding customers and a necessary focus on management and IT innovation, responsiveness, speed, and quality. As a result, companies have had to look for radical ways to deliver. Hammer suggested using IT to examine the assumptions behind the processes. He partnered with James Champy on the book Reengineering the Corporation: A Manifesto for Business Revolution to present their overall methodology.
At about the same time, Thomas H. Davenport and James E. Short from MIT put out an article about business process redesign. Their version of BPR placed IT at its heart. They detailed ongoing work at MIT, Harvard, and several consulting companies, and they hatched an approach for others to follow. Though still urging radical change, their BPR strategy was more modest, tempered with the discipline of continuous improvement. They recommended selecting the most critical processes, then analyzing and redesigning them iteratively.
From these efforts, big businesses clamored to start their own BPR projects. They were interested in how to produce their goods quicker. By 1993, an estimated 65 percent of Fortune 500 companies claimed to either have initiated or planned for BPR efforts.
In 1994, Manchester University’s Informatics Process Group (IPG) introduced process analysis and design methodology (PADM), a framework for BPR tools and techniques. PADM sprung from the Process Modelling Cookbook, which describes two phases of techniques: representation and refinement. Both frameworks offer continuous, iterative process improvement for BPR. PADM, however, tries to manage the relationship between technology and processes.
PADM recognizes that the relationship between IT and process is reciprocal: Changes in IT may require changes in process, and changes in process may require changes in IT. The old way, which advocated for an IT-centric model, was fading out. In his book Process Reengineering: The Key to Achieving Breakthrough Success, Lon Roberts continued Hammer and Champy’s emphasis on a customer-centric model.
One study by Aphrodite Tsalgatidou compared four BPR methodologies: Hammer/Champy, Davenport, PADM, and Ivar Jacobson. The study compared whether the BPR methodologies recommend detail modeling and analysis of the as-is situation, whether they support incremental or radical change to business processes, and whether they suggest a review of the business prior to a BPR project. From this study, Tsalgatidou recommended five phases for a BPR project:
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Learn the processes
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Create the business vision
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Model and analyze the current processes
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Model and analyze future (to-be) processes
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Transition to a continuous improvement process effort
This wave of optimism for BPR did not last long. By 1995, the backlash hit. Professionals who had strongly supported the use of BPR turned against it. Alongside poorly performed projects and abuse of the concept, BPR use declined. Many of the earliest proponents blamed the hype of the concept itself.
But BPR did not disappear completely. Companies never really stopped reworking the processes, but instead labeled it differently, especially as the internet grew in prominence. In the 2000s companies wanted to be able to offer their customers more, and BPR was a way to make it happen. Newer BPR frameworks are different from those developed in the 1990s because technology and the internet are now intrinsic; the infrastructures are in place. BPR was considered the precursor to today’s BPM.
Subramanian Muthu, Larry Whitman, and S. Hossein Cheraghi developed another contemporary methodology for BPR in 1999. Their consolidated approach still disrupted a company, but was structured with a model gleaned from five different methodologies. This IDEF0 diagram represents the process functions with boxes that show parent-child relationships. This model has the following steps:
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Prepare for BPR
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Map and analyze as-is process
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Design to-be processes
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Implement reengineered process
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Improve continuously
Other consulting companies became involved in designed BPR methodologies that would produce better results during the 1990s. With small tweaks, companies like Accenture, McKinsey & Company, and Bain & Co. wanted to decrease the failure rate of the typical BPR project and instead focus on the potential of the methodology. They developed their own models, with mixed success.
BPR is having a resurgence now. The objectives and the execution are different; BPR is no longer synonymous with massive downsizing efforts, and companies are once again embracing it for their future.
Today, Agile transformation and object-oriented BPR are used widely and successfully, especially in developing and launching software systems. Agile transformation has many similarities to the BPR of the 1990s, although it is not as extreme. Object-oriented BPR depends on business process modeling, which presents your processes as a comprehensive visual to highlight efficiencies or issues. Modeling can help identify the business’s progress or status. Modeling efforts often end up as a data flow diagram (DFD), which is a graphical representation of your processes using simple objects like rectangles, circles, and arrows, which show the path of information.
According to Ivar Jacobson’s book, The Object Advantage: Business Process Reengineering With Object Technology, this type of modeling more closely reflects the company’s reality. The “objects” in this type of BPR are occurrences of information or behavior that means something to the company, such as specific customers, invoices, work tasks, or events. The processes are modeled with these objects, clarifying the inner workings of a company. Then the business can either be reverse- or forward-engineered. Reverse engineering is the existing business modeled as-is. The business is studied and presented. In forward engineering, the reverse-engineered business is redesigned with new processes. In process modeling, many programs and professionals use Business Process Model and Notation (BPMN) as a standardized language. BPMN can help perform the restructuring process in BPR projects.
Adam Smith’s The Wealth of Nations (1776) was one of the earliest precursors to BPR. He wrote about the division of labor and using separate work areas to increase productivity in a pin factory. His ideas showed a process revision that was unheard of at the time, but would have major disruptive power.
In 1820, American Railway also changed how business operated. By implementing new command-and-control procedures, the company helped usher in an age of industrialism and capitalism in America.
And in 1880, American mechanical engineer Frederick Taylor, as one of the first management consultants, released his ideas about efficiency in business. His book The Principles of Scientific Management outlined the scientific management principles that gave certain sets of work to trained employees and charged managers with the responsibility to plan the work. His influence and consultation changed the business landscape and set down roots for major business reinventions.
Critiques of Business Process Reengineering
It is clear from all of the literature and commentary on BPR that it made a huge impact when first introduced in the 1990s. It was a complementary methodology to the time where computers and information technology were introduced into the workforce en masse. There was little doubt when it delivered such remarkable results. However, Holland and Kumar noted in 1995 that between 60-80 percent of BPR initiatives failed, although there is evidence that those numbers have decreased considerably in recent years. Further, BPR earned a reputation of causing massive layoffs, so it was extremely unpopular in the workforce.
The main criticisms of BPR:
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The methodologies used to implement BPR do not address a changing business landscape.
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There is no way to validate the assumption that processes are the main limiting factor for performance; the expectations are grossly exaggerated.
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BPR totally ignores the company’s current status and assumes that “all new” is better.
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Incremental changes may be better for a business model.
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There is extreme American cultural bias in the use of BPR.
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BPR ignores the organization’s constraints.
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BPR is a complex, time-consuming undertaking.
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Projects can fail.
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Buy-in is difficult. BPR tears down what people know and completely replaces it, causing stress.
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BPR is not experimental, as it can require dedicated resources and a heavy cost.
The criticisms of BPR are certainly challenging to overcome. They may be accurate as well. It is important that each is addressed before or during a BPR project, but also understand what to address and what to ignore, especially when your company is performing a concurrent enterprise resource planning (ERP) project, which incorporates software that deals with your data. Some myths about BPR and ERP:
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BPR does not mesh well with ERP projects. Any time you change software — especially data collection and analysis software — your processes will need to change.
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Implementing a new ERP system will improve processes. The reality is that ERP software is not process improvement software. If your processes are broken, ERP will not fix them.
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Focus only on “to be” and don’t worry about “as is.” We learn from our past mistakes. Current processes tell you what is missing — start there.
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BPR doesn’t need organizational change management. The very nature of BPR cries out for good change management principles. Any time you make an improvement, change management must be in effect.
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Get the software before the BPR process. You do not need to have the software first; you can reengineer the processes before choosing the software.
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All processes should be overhauled before getting a new ERP system. You can simultaneously implement ERP while reengineering your processes.
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Doing ERP and BPR at the same time will be expensive. On the contrary, you can work these two together for cost savings.
The Factors for the Failure and Success of BPR
Overall, the factors behind BPR failure are related to a narrow, linear approach and to the communication gaps between the project’s stakeholders. Today’s professionals point to an emphasis on information system use for BPR, which lines up with IT’s foundational role in business.
Hammer and Champy during the earliest wave of BPR listed the following reasons that it could fail. These were illustrative of organizational climates in the 1990s, but are still relevant:
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The business attempts to fix a process instead of changing it. Recognize the extent of company problems.
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The organization doesn’t focus on business processes. Properly analyze the processes, and define the objectives clearly.
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The company ignores all elements except process redesign (e.g., reorganization, reward system, labor relationships, redefinition of responsibility and authority).
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You neglect people’s values and beliefs and instead reward behavior that exhibits new values and behavior.
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You are willing to settle for negligible results.
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You suspend the process too soon.
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The team places prior constraints on the definition of the problem and the scope for the reengineering effort.
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You allow existing corporate cultures and management attitudes to prevent reengineering from taking off (e.g., consensus, short-term thinking, avoidance of conflict).
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You try to force reengineering from the bottom up.
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You name someone who doesn’t understand reengineering as the leader of the effort. Provide adequate training to staff on BPR.
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You don’t provide enough resources to reengineer.
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You bury reengineering in the corporate agenda.
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You spread your energy across too many reengineering projects.
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You start your reengineering initiative when the CEO is close to retirement. Good management is required.
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You fail to set apart reengineering from other business improvement programs (quality improvement, strategic alignment, right-sizing, customer-supplier partnerships, innovation, empowerment).
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You concentrate exclusively on design and disregard implementation, or you design processes that are too bureaucratic.
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You try to keep everyone happy during the reengineering process, but please no one. Buy-in is important, but remember that management and employees should commit to making the company better, not just their department.
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You shy away when people resist reengineering changes.
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You drag out the effort for too long. Conversely, spend the necessary time to fix the processes that are broken.
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You don’t assemble the right team. The experts know that it takes more work to redesign than to automate and that it’s worth the effort. They are also motivated and understand that Excel is not the best tool for every fix.
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You don’t have adequate infrastructure. This can lead to one department or a specific process becoming optimized or prioritized at the expense of another.
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You see BPR as a one-time cost-cutting exercise.
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You don’t have an eye on the external industry. The team could get lost in the future vision and concentrate on only internal efficiency fixes.
You still have every reason to think that BPR will succeed when introduced to an organization today, regardless of the number of failed businesses and confusion that surround its use. No matter the type of business, a few overarching factors, with careful consideration, could guarantee a successful BPR:
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Proven Methodology: Use methods that work, especially if they have succeeded in your company already.
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Business Case: You should think through and document a compelling reason for making change.
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Staff Buy-In: Bring in your staff early on in a project and let them drive innovation.
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BPR Team Composition: BPR initiatives need executive sponsorship, preferably from top management. They also need teams that are carefully chosen with in-depth knowledge of either the business or the methodology. This could mean line ownership of the project.
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Business-Needs Analysis: You should take into account the company’s business strategy and long-term objectives during analysis.
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Adequate IT Infrastructure: IT should be capable of implementing the reengineered processes; IT solutions alone cannot transform the processes.
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Effective Change Management: You should manage the expectations, timeline, and business impact.
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Ongoing Continuous Improvement: The only constant is change, as the old adage goes.
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Customer Needs Are a Priority: The vision of customer-centric processes should direct business practices.
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Take Advantage of the Cost Benefits: Decreasing the overall cost makes the business more competitive in its industry.
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Develop with a Strategic Lens: Look at all operational processes, asking relevant questions about how processes work as-is and how they can be improved over time.
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Focus on Outcomes: The processes should go beyond traditional tasks and functional boundaries.
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Simplify the Work: Objectively assess the activities and tasks to eliminate those that add unnecessary complexity and less value.
According to Ray McKenzie, Founder, Principal, and content blogger at Red Beach Advisors, "Business process reengineering and redesign is continuously needed within enterprises and organizations to re-assess a process’s effectiveness along with identifying new, more efficient ways to perform daily functions. BPR is extremely valuable to companies that want to improve how they do business internally and externally and how they drive value to their customers.
“For any organization that is undergoing an implementation of process review or reengineering, I suggest that companies incorporate supporting data points to measure the processes current efficiency and develop targeted goals for measurement. A process that is implemented to improve workflow, but is not measured, is not an accurate process to be implemented. Measurement of performance and improvement is the key."
The Human Factor in Business Process Reengineering
Every discussion of BPR includes sections on processes and aspects of IT. It would be remiss, however, to leave out the human factor. Any successful BPR project must take the people into account. Addressing the human motivational reactions to change is critical.
It cannot be stressed enough that companies should ensure that their employees are suitably motivated and have the resources they need to learn about new technology. Not only are the processes changing in BPR, but the way that people think and interact with each other must shift as well. Incentive schemes can be one way to ensure BPR success.
How BPR Relates to Information Technology and Information Systems
Information technology (IT) is a term that describes the hardware, software, and the network infrastructure. Information systems (IS) is broader and encompasses the employment of IT and the systems; it covers the three dimensions of IT, management, and organization. BPR and IT/IS should be inseparable. Every successful BPR project owes its relative success to IT/IS.
Though BPR has its roots in IT management, it is mainly a business initiative. Still, IT has historically played an important part in BPR, linking the owners of process and those who implement it. In the earliest iteration of BPR, IT replaced some human workers in processes. In the most recent iteration of BPR, IT serves as an existing infrastructure that can be optimized. IT implementation and improvement help save time and improve the accuracy of information exchange, creating a business advantage. IS has allowed collaboration within an organization and even across organizational borders.
In BPR, effective IT makes it possible to:
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Share databases
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Develop expert systems
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Implement telecommunication networks
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Use decision-support tools
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Have wireless data communication and telecomputing
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Interact with customers in multiple formats
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Identify and track information and personnel
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Compute at a high level and on the go
Conversely, BPR projects could be directed toward or act as a part of an IS/IT revamp. With BPR projects, an organization’s IT/IS can consider:
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Upgrades to client/server technology
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Current groupware/collaboration technology
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Mobile computing
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Data-capture technology
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Integration of telephone and computer systems
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Web services and service-oriented architecture
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BPM software, imaging technology, or a workflow management system
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ERP, customer relationship management (CRM), or supply chain management (SCM) software implementations
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Implement DSS, a data warehouse, business intelligence, data mining, or dashboard software
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Changing internet services, domains, electronic data exchange, or electronic commerce systems
Mohammed Alsaigh notes that information systems’ role in BPR comes in three stages: before the design process, during the design process, and during the implementation. Before the design process, IS can create infrastructures and manage their information. During the design process, IS can bring in large quantities of information, analyze it, and enhance the business’s ability to make informed decisions. During implementation, IS may be used to improve the IT processes and communicate the ongoing results of the BPR.
BPR Successes in the Real World
The following are success stories of BPR implementation by well-known corporations:
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Taco Bell started the kitchenless restaurant. It went from a $500 million regional company to a $3 billion national company.
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Hallmark decreased its card-to-market time from three years to four months.
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Ford cut payable headcount by 75 percent.
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Mutual Benefit Life improved the efficiency of its underwriters by 40 percent.
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Detroit Edison reduced the payment cycles for work orders by 80 percent.
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New Life Insurance decreased the application processing time from an average of 22 days to 17 minutes.
Other companies that have used BPR for major overhauls include IBM, AT&T, Sony, General Electric, Walmart, Hewlett-Packard, DEC, Kraft Foods, Citibank, Northwestern Bank, Bell Atlantic, GTE, and Bank of America.
Business Process Reengineering: Comparable Methodologies and Programs
BPR has a cross-functional relationship with many other process improvement methodologies. It is common for consulting firms to have a philosophy to which they adhere. The following is a list of some methodologies that compare to BPR, along with their common characteristics and points of differentiation.
Total Quality Management (TQM): Widely considered the mother of process improvement methods, TQM is a management approach that is primarily concerned with productivity and changes that lead to customer satisfaction with the participation of all members of the organization. Both TQM and BPR aim to improve efficiency, but where TQM focuses on continuous improvement, BPR aims for product innovations. While BPR emphasizes the use of IT, TQM highlights the use of statistical process control. TQM can employ both top-down and bottom-up approaches, but BPR can only go from the top down. The biggest difference is that BPR makes major changes rapidly, while TQM rolls out small continuous improvements over time.
Six Sigma (SS): Many say that TQM evolved into Six Sigma, which is a data-driven approach that focuses on variation reduction to eliminate defects from processes. Its intent is an error-free business process. Similar to BPR, Six Sigma requires questioning the status quo. However, Six Sigma uses an “align and maintain” five-step method to identify the root causes and does not completely redesign the process like BPR. The steps in Six Sigma:
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Define the problem
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Measure the current process
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Analyze the cause of problems
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Improve the process
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Control
By using Six Sigma in BPR projects, businesses can get:
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Statistically significant tools and methods to develop quality processes and knock out variation
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The assurance that process improvements are data driven, using baselines, scorecards, dashboards, and metrics
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A common process improvement language
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Stage-gating, ensuring that all deliverables go through DMAIC (Define, Measure, Analyze, Improve and Control) phases
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The elimination of process defects, scrap, and rework so that costs decrease
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The sigma quality level that compares processes and represents the internal customer voice
Using Six Sigma in BPR projects enables the “customer inward” approach, an end-to-end strategy mainly driven by the voice of the customer. It should enable collaboration by all segments of the business — even external partners — and be well-managed so that success is defined. This approach should include representatives or, at the very least, input from the following company personnel:
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Customer Service: The people who own the outcome of production
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Six Sigma Black or Green Belts: Enabling the further institution of SS in the company
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Finance: To ensure that the improvements save money
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An External Consultant: As an objective participant
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Information Technology: To ensure that the technology can mesh with the proposed improvements
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Distribution: For customer and product perspective and buy-in
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Legal or Personnel Responsible for Audits: Meeting the legal or corporate standards
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Human Resources: Ensuring enough personnel and support
To integrate BPR projects with an existing DMAIC approach, companies should start by aligning the BPR project team and their Six Sigma resources. This way, you can identify SS opportunities in the course of the BPR project. Businesses have other ways to integrate BPR projects with SS:
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Draft a project charter. Charters give the business case for projects and help guide them. They also provide an opportunity to draft baseline metrics to show progression.
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Use DMAIC to solve problems where the solutions are not known.
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Discuss identified projects with key stakeholders. This discussion should validate and prioritize the projects, as well as alert to possible quick-win projects.
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Turn the focus of your strategies into customer-centric projects. Use the company’s strategic objectives to decide on projects that are high-value and well-scoped.
Lean: Lean is also based on the idea of eliminating waste, typically extra layers of management to place everyone closer to the process. Further, Lean has an analysis orientation where every step is thoroughly evaluated, and only value-add steps are maintained. Lean and BPR are similar in that they quickly achieve results, but Lean does not start from scratch the way BPR does. It asks for employees to look at the processes candidly as they would for BPR, but Lean simply pares down what is not working or relevant instead of reengineering those processes.
Kaizen: Another continuous improvement methodology, Kaizen is a long-term work strategy of small, incremental process change. The intent of Kaizen is not similar to BPR, as BPR teaches a complete overhaul of the business processes as well as their associated systems and structures. BPR is a defined project, meaning it has a beginning and end, while Kaizen is continuous. Whereas a project team and select individuals in the company may perform BPR, Kaizen is a methodology, bordering on a philosophy, that everyone should perform company-wide.
Business process management (BPM): BPM is both a management discipline and a software system. BPM is concerned with automating and reusing processes over a lifecycle. BPM’s success is irrespective of the company culture, and it is continuous and incremental. BPR is tied to the company culture and presents a drastic change. Many professionals consider BPM and BPR complementary methodologies, because BPR may be done long before BPM takes over. Though methodologies such as BPM and business process integration (BPI) focus on the enterprise profit and productivity, BPR emphasizes the customer needs and organizational mission. The differences between BPM and BPR methodologies are as follows:
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BPM is lower risk. BPM focuses on automation of processes, not a complete revamp. BPR is higher risk, focusing on redesign from the ground up.
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BPM uses what is already existing. It focuses on one process at a time, not at all of the processes and how they tie together. BPR starts fresh with new processes, discarding the old ones.
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BPM is about optimizing and managing the processes, not reworking. BPR is about radical redesign.
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BPM is slow progression. It is easier for staff to accept as it is gradually built in. BPR can turn the company upside-down; even the company’s vision and mission can be redesigned during a BPR project.
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BPM guarantees continuity. BPM gradually builds, cyclically and continuously. BPR projects happen fast and at one time to disrupt “the way things are.”
Agile: Used mainly in software development, this management approach is also iterative in nature. Small sections of the project are completed at once, almost in a modular fashion. Industry experts say that the difference between Agile and BPR is that while both disrupt the processes, BPR stays true to the same outcome, but with a better, cheaper, and faster way of getting there. Agile produces a different outcome completely. For more information on Agile, see Everything You Need to Know About Agile Project Management.
Decision Support System (DSS): DSS (or GDSS) is an informational computer application that reviews and analyzes the data of a business to assist with decision-making. DSS was the first IS to focus on redesign of business processes. BPR and DSS share the aim of radically improving business processes. However, DSS focuses on one decision at a time, whereas BPR focuses on the whole organization.
Enterprise Resource Planning (ERP): ERP is an integrated suite of business management software that can help manage and automate business needs. Experts in the field believe that without BPR, ERP implementation will fail. Some ERP vendors promote their software as capable of telling businesses how their processes should work. Suresh Subramoniam estimated that even the most suitable ERP system could have a maximum of only 80 percent fit with an organization’s existing workflows. He further posits that a BPR event makes ERP implementation quicker, less expensive, and better accepted by employees.
The Future of Process Improvement Methodologies
According to many experts, the future of BPR involves process management and the combination of methodologies. Tech advancements will keep BPR consultants busy for many years to come, because BPR will continue to evolve and adapt.
According to Steven Wallis, Co-Founder, Analyst, and Consultant at ASK MATT and writer at Foundation for the Advancement of Social Theory: Theory for a better world, “Business process reengineering currently only achieves its goals about 80 percent of the time. The strange thing is that TQM and culture change efforts are similarly effective.
Despite the encouraging stories of entrepreneurs, business startups fail at an alarming rate. Stranger still, on the national level, our national policies also rarely reach their goals. And of course, on the personal level, it is generally known that psychology is not highly effective. There are many explanations for all of these failures: lack of funding, conflicting agendas, participants who resist change.
“Research by my colleagues and I have identified a new perspective. We suggest that our society's ‘social technology,’ our underlying skill or ability to understand our organizations and implement successful change, is simply not up to the task. In short, we in the business world are working with ‘stone knives and bearskins,’ while engineers and physicists are using highly effective gizmos and gears. Rather than place the blame on the people involved, our research shows that there is an underlying ‘structure’ to our theories of change.
“We use integrative propositional analysis or IPA (the methodology, not the beer) to evaluate the internal logic-structure found in business theories — such as those used in change management. IPA shows that theories (laws) of physics and engineering have a systemic ’depth’ of 100 percent — which is why they are so useful. In contrast, theories in the social sciences (along with policies and strategic plans) typically have a depth of less than 20 percent. So despite the very limited success of BPR (and related methods and theories of change) there is hope that we will learn to create theories with greater depth to more reliably support successful change."
According to Connie Moore, Senior Vice President of Research at Digital Clarity Group and blogger at Digital Clarity Group, “When BPR was developed in the 1990s, the concepts were groundbreaking and valid. Much of what we do today comes from those resources; they were not discredited. The concepts were much like the ‘big bang’ in the industry, especially in terminology such as ‘obliterate.’ Professionals would go in and change everything by redoing it all.
“However, they were very literal in the way that they applied these concepts. The projects were too big in scope. Teams did not know what they were doing; they used little of the methodology. This is when the methodology was discredited."
“The methodology replacing BPR was continuous improvement, because companies could not handle big changes. They could handle looking at their processes, improving upon them, and looking at them again to see how to improve them further. Since change is always happening and nothing stays the same, improvement is never done. It makes sense then to have skilled people with training in methodology to improve things. This is called operational excellence."
“Especially in the heavily regulated industries, where customer service is not a critical component like in retail or customer-focused industries, operational excellence is essential. These are industries such as oil and gas, which may be subject to fines, so their operational excellence is necessarily different. Operational excellence in these industries looks like continuous improvement and streamlined processes. This is in contrast to industries that rely on the customer experience."
“Sometimes the industries that rely on customers forget about continuous improvement, but the two concepts of operational excellence and customer experience must connect in all industries. This looking at the big picture is the future of BPR,” Moore said.
Application of Business Process Reengineering
From the lessons learned in the 1990s, companies understand that BPR implementation must be guided, if not completely performed, by experts. Over the years, BPR was hot, fell from grace, and came back into favor, and many surveys traced not only what went wrong, but also what could be done better. Let’s take a look at who should perform BPR and how much you should expect to spend.
Consulting firms can go into a company and ensure that this risky endeavor is done correctly, saving the company time, money, and frustration (and perhaps saving the company itself). Consultants in this industry are objective and immune to the politics that may be inherent in the company. They have a host of “lessons learned” that they can apply to each new BPR event, they can effectively communicate what is happening based upon this experience, and they can often take the brunt of being the outsider who “owns” the method instead of it coming from someone internal to the company. Aside from facilitators, a consultant can also act as team members and subject matter experts.
For example, Sean Martin, an expert in BPR, content marketing manager for Directive Consulting, gives his expertise in how to leverage social media interest: “As an online marketing firm, we are constantly innovating and re-innovating our strategies to account for a growing and adaptive market. BPR is a great way of doing this, and a lot of online marketing startups have somewhat prided themselves on their ability to reverse engineer certain functions and capabilities of their competition.
“With posts being written about the post-digital world and the necessary accommodation of pervasive social media trends into marketing and local business tactics, BPR is a great way to start from the very big picture and whittle your way back down to the specifics. The marketing companies that are doing this are accounting for more and more of the online traffic and are generating huge social media followings, like BuzzFeed, Twitter, Snapchat, and Facebook. Those are social media platforms in and of themselves, yes, but what they are doing is innovating the way in which users interact with the internet and that's what we all need to be doing as online marketers: rethinking the way people interact and molding our business to build new trends instead of catch up to old ones.”
Who Has Done — and Can Do — BPR?
Private, public, and government organizations have all performed BPR. Multinational companies were the first to take on BPR projects, and the banking industry soon followed. Even smaller companies can benefit (and they have) from a BPR program to keep them competitive. Now, BPR may be encouraged by software companies that sell ERP and BPM solutions. Conventional wisdom advises that BPR is implemented in firms that have at least 20 employees (of which at least four are management), a strong managerial commitment to innovation, and a developed IT infrastructure.
How Long Does BPR Take and What Does It Cost?
Two main considerations are on the forefront of any CEO’s mind when talking about process improvement: How long will this take? How much will this cost? Overall, experts say that each BPR process varies, but takes approximately six to 10 months, depending on the type of business and the consulting company hired for implementation. The cost also varies, depending on the complexity of the business processes. In the year 2000, a BPR implementation cost from $9,000-$16,000. Currently, consulting companies have a payment structure to which they adhere. Most ensure that the cost of consultancy is menial next to the 40-80 percent savings in processes that they guarantee.
Top BPR Tools
Many consulting companies have proprietary tools or favorite software systems that they use in their BPR implementation. Ideally, these tools should enhance the clarity of their vision, enforce the consistency in their endeavors, and keep to the best practices, such as using a top-down approach, working with a small core team of experts (no more than 10 people), and combining a BPR methodology with a modeling notation. These tools fall into six categories: project management, coordination, modeling, business process analysis, human resources analysis and design, and systems development.
Norbert Nogrady, Managing Director & Co-owner of JCM Ltd., gives his advice on BPR and tools to his peers in the Telecom industry. “During my 20+ years career in the field of customer care, I managed a number of BPR projects at large multinational companies. In my experience, BPR is most valuable in the case where it is independent from the IT department and the chosen vendor after the implementation period — in practice, a few weeks after the implementation. Input shall be received from customer care and the related organizational units: sales, finance, legal, and others.
“It is also important to mention that BPR projects will only be as successful as its supportive systems are fitting the tasks at hand. Namely, in case the IT department chooses a system that requires coding, parameterization and process setup by IT professionals, BPR projects will be lengthy and ineffective.
“I have always preferred systems in which end users can set up their processes in a dedicated graphic interface and the system implements the processes created this way immediately. A good example for such BPR project is from UPC (a multinational telecommunications company from Europe, where I have been the director of customer care). In this case, all customer care supervisors, aka team leaders — who thus became process owners — attended a half-day BPR training (provided by the supplier) and simply created their own processes using the GUI of the implemented system called xFLOWer. The project implementation and rollout only took six weeks to complete, and at the end of this period we had the system up and running with the business processes we needed. Compared to the industry average of nine to 12 months, this project has been a huge success and extremely quick implementation of BPR.
“I recommend for anyone planning to implement a BPR project to choose a BPR/workflow system that possesses similar abilities, therefore the project length will be shortened dramatically and the project will be a great success for everyone involved.”
Process Management and Workflow Tools
Process management tools, or business process management systems (BPMS), are software systems that view the business as a set of processes or workflows. BPMS enables businesses to cohesively optimize their processes by modeling, implementing, executing, and monitoring. This is a more structured approach than workflow software, or workflow management software (WfMS), whose main mission is simply to model and automate the direction of documents and tasks. Many BPR projects use BPMS, and many more use WfMS. Authorities in BPR implementation have their favorites based upon their needs and expertise.
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